From the Editor
Mike Hofman

EBay Buys Bill Me Later for Nearly $1 Billion

 

Online auction giant eBay has acquired Bill Me Later, the Maryland-based payment credit company that ranked No. 64 on this year's Inc. 500. The deal price was reported to be $945 million, including $820 million in cash and $125 million in stock. EBay's intention is to merge Bill Me Later, a site that lets online retailers offer instant credit to customers, into its PayPal unit. Separately, eBay announced that it was laying off 1,000 workers.

Over at GigaOm, Stacey Higginbotham speculates that "the folks over at Amazon.com aren't likely to welcome eBay as Bill Me Later's new corporate overlords." Amazon owns a chunk of Bill Me Later (or did) and was one of the service's top customers, along with Apple and Newegg. But Amazon has eschewed PayPal in part because it is owned by eBay, which Amazon views as its top competitor. Will it now discontinue Bill Me Later as a payment option?

"Currently, Bill Me Later is still available as a payment option on our site, but I can't speculate as to whether we'll continue to offer them going forward," Amazon said in a statement.

Among the comments to GigaOm's post on the subject was this analysis courtesy of Bobby M: "Me thinks eBay threw money towards competitive grwoth, rather than acquiring yet another payment service. Lets face it, there is nothing unique about BML. However, it now cuts into Amazon's payment options for its customers. So was this a strategically correct move - yes. Was it worth the price - No."

What do you think? Is Bill Me Later (at 2007 sales of $86 million) worth 10 times revenue? Was this a smart buy for eBay? If so, why? And if you were Amazon, would you continue to offer Bill Me Later, or phase it out?

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City. @mikehofman